Gov. Jerry Brown, a Demo­crat, leads the eighth-largest eco­nomy in the world, and this power­house is wad­ing in­to the na­tion­al de­bate over hy­draul­ic frac­tur­ing, the oil and nat­ur­al gas boom, and what it means for the eco­nomy and en­vir­on­ment. Mark Necho­dom, who as the state’s De­part­ment of Con­ser­va­tion dir­ect­or is Brown’s top oil and nat­ur­al gas reg­u­lat­or, re­cently spoke with Na­tion­al Journ­al about the state of the en­ergy play in the Golden State. Ed­ited ex­cerpts of the in­ter­view fol­low.

What was the im­petus be­hind the re­cently en­acted law reg­u­lat­ing hy­draul­ic-frac­tur­ing activ­it­ies?

The broad­er pic­ture all across the coun­try as you’ve now seen is that there is great in­terest, which starts with frack­ing, but it broadens out to how oil and gas ac­tu­ally work and the po­ten­tial en­vir­on­ment­al im­pact.

In Cali­for­nia it has been used for 60 years, and act­ively used for 40 years, and in Cali­for­nia there has been not one re­cord of re­por­ted dam­age dir­ectly to the use of hy­draul­ic frac­tur­ing. But des­pite that, giv­en the great na­tion­wide wave of con­cern, we at the De­part­ment of Con­ser­va­tion are treat­ing this as an op­por­tun­ity to again em­brace pub­lic de­mand for know­ledge and trans­par­ency, and this is an op­por­tun­ity for people to learn where their oil comes from, just the same way we want to teach people where their milk and wa­ter come from.

It is in­ac­cur­ate to say “¦ that hy­draul­ic frac­tur­ing stim­u­la­tion is not mon­itored or not reg­u­lated. That’s simply just not true.

It is a reg­u­lated activ­ity in the sense we reg­u­late all activ­it­ies that are done in the drilling and com­ple­tion of an oil and gas well. From the reg­u­lat­or per­spect­ive, hy­draul­ic frac­tur­ing stim­u­la­tion is one of sev­er­al activ­it­ies that take place in the op­er­a­tion of a well or in­creas­ing the pro­ductiv­ity of a well.

But we are not dis­missive about this. In the year and a half or year and three quar­ters in this po­s­i­tion after be­ing ap­poin­ted in Janu­ary 2012, I’ve learned an enorm­ous amount about the oil and gas in­dustry and have been in­tim­ately edu­cated about their prac­tices in the field. And from my per­spect­ive, it is something that is done safely.

People don’t even real­ize Cali­for­nia is an oil pro­du­cer, let alone that it’s the fourth largest oil and gas pro­du­cer in the coun­try. Most people know noth­ing about Cali­for­nia’s oil and gas in­dustry. To sud­denly get all con­cerned about one par­tic­u­lar activ­ity is a little out of pro­por­tion. I’m not be­ing dis­missive about this. Let’s treat this as an op­por­tun­ity.

How do you re­spond to the cri­ti­cism the law faces from en­vir­on­ment­al­ists who say it’s watered down and doesn’t even start re­quir­ing dis­clos­ure of frack­ing activ­it­ies un­til 2015?

I simply dis­agree. It’s not been watered down. It was the best they could do.

How com­mon is frack­ing now in Cali­for­nia? I’ve got­ten a wide range of an­swers on this ques­tion. Does the fact that the prac­tice isn’t reg­u­lated make that ques­tion dif­fi­cult to an­swer?

By our count, be­cause of the vol­un­tary re­port­ing re­quire­ment that we put in place over a year ago, we might see around 650 hy­draul­ic frac­tur­ing jobs a year. We is­sue between 2,000 and 3,000 drilling per­mits a year. Not every well is fracked when it’s drilled and com­pleted. Some of the hy­draul­ic frac­tur­ing jobs are done on wells 10-20 years old. As we get the emer­gency reg­u­la­tions or wheth­er we use emer­gency reg­u­la­tions or com­pli­ance with S.B. 4 [the frack­ing law] as of Janu­ary 1 this com­ing year, we will have really be­gun ac­cu­mu­lat­ing data on well stim­u­la­tion. That data will give us a lot more ac­cur­ate pic­ture of how much is go­ing on.

Tell me more about the vol­un­tary re­port­ing.

In the first 60 days [of my ten­ure], it was quite clear the le­gis­lature had a much dif­fer­ent pic­ture in their minds of the im­port­ance of reg­u­la­tions of hy­draul­ic frac­tur­ing. So lit­er­ally with­in 90 days of my ten­ure we put out a no­tice to op­er­at­ors re­quest­ing that they vol­un­tar­ily re­port hy­draul­ic frac­tur­ing jobs on [the in­dustry-run web­site] Frac­Fo­cus. The reas­on it was vol­un­tary is we can­not or­der people to do something without go­ing through the rule­mak­ing pro­cess. There was no sense in do­ing a form­al rule-mak­ing to do re­port­ing. So we asked to vol­un­tar­ily re­port, and the in­dustry stepped up. They star­ted to re­port and went back in his­tory and re­cor­ded all of their frac­ture jobs back to 2007.

Was there any re­port­ing be­fore this?

No. There didn’t ap­pear to be any need to.

From reg­u­lat­ors’ point of view, en­gin­eers in the field ask them­selves: “Is there an activ­ity go­ing on that rises to the level of risk that war­rants a level of mon­it­or­ing?” And quite frankly, for 40 years the di­vi­sion didn’t see hy­draul­ic frac­tur­ing as something that was a spe­cif­ic event of high risk, like for ex­ample every blo­wout pre­ven­tion equip­ment test will be wit­nessed by one of our en­gin­eers be­cause a fail­ure from our point of view is a very cata­stroph­ic event.

So we do re­port all of that, and it’s all in there in [the] elec­tron­ic well. It’s risk-based. Since we had not seen hy­draul­ic frac­tur­ing as a high-risk activ­ity com­pared to oth­er things done in the oil patch, it was not re­por­ted.

Do you think the per­cep­tion people have on frack­ing has out­grown the spe­cif­ics of the ac­tu­al drilling tech­nique it­self?

I do. I think it’s le­git­im­ate for us as the reg­u­lat­ors to ap­ply sci­ence and risk man­age­ment to the per­cep­tion, and we’ll sort it out. Look at it 10 years down the road, after strong re­port­ing re­quire­ments, and I think my sus­pis­cion will be that we dis­cov­er we have been do­ing pretty well. Right now that’s a work­ing hy­po­thes­is. I can’t tell you based on data.

How do you re­spond to the en­vir­on­ment­al and pub­lic-health con­cerns about an­oth­er well-stim­u­la­tion prac­tice called acid­iz­ing, which puts large amounts of hy­dro­fluor­ic or hy­dro­chlor­ic acid down wells?

We must be care­ful with some of the terms here. Acid­iz­ing is a term that’s gen­er­ated from the en­vir­on­ment­al com­munity con­cern; it’s not ne­ces­sar­ily an in­dustry term. We’re us­ing hy­dro­fluor­ic or hy­dro­chlor­ic acid at some per­cent­age, about 15 per­cent con­cen­tra­tion.

There are dif­fer­ent ways of us­ing acids. Most of the use of acid in the oil patch is for routine main­ten­ance, like dis­solv­ing min­er­als around the well bore.

We’re now by reg­u­la­tion go­ing to set the line so you’re not go­ing to reg­u­late stand­ard main­ten­ance and cleanup, but we will reg­u­late any time a treat­ment is to change that per­meab­il­ity of the rock form­a­tion, geo­logy around the well.

What the gov­ernor has said is here we have tech­nique — wheth­er it’s frack­ing or well-stim­u­la­tion of any kind — and we have two-thirds of the known re­serves of oil shale de­pos­its in the United States, and we should sens­ibly be pro­du­cing that. It’s an enorm­ous op­por­tun­ity for the state to de­vel­op eco­nom­ic­ally, and he [Brown] has said it needs to be well reg­u­lated.

He placed his trust in me, my di­vi­sion, to get this stuff right. And I come from a sci­entif­ic back­ground: Ph.D. in en­vir­on­ment­al policy and polit­ic­al sci­ence, done hard sci­ence for years in the fed gov­ern­ment. I have a pretty good sci­ence nose, and I am com­mit­ted to us­ing good sol­id sci­ence and evid­ence-based rule­mak­ing. That’s why I’m not par­tic­u­larly wor­ried, be­cause I’m not go­ing to let some sloppy work go by so the in­dustry can make a lot of money.

What can Cali­for­nia teach the rest of the coun­try about oil and nat­ur­al gas reg­u­la­tions?

We ac­tu­ally have much more strin­gent stand­ards than many states. I’m al­ways very cau­tious, be­cause I cer­tainly don’t want to cri­ti­cize oth­er states and their reg­u­la­tions, and don’t want to do the stand­ard [talk] of Cali­for­nia ex­cep­tion­al­ism. It’s not my style.

Can you talk about Cali­for­nia’s par­al­lel tracks of oil and nat­ur­al gas paired with one of the largest and most am­bi­tious re­new­able-en­ergy mar­kets in the world? How can these two tracks co­ex­ist? Do you find them con­flict­ing or can they be com­ple­ment­ary?

They are cer­tainly not con­tra­dict­ory. The real­ity is 96 per­cent of en­ergy con­sump­tion in Cali­for­nia has something to do with hy­dro­car­bons. Re­new­ables, if you don’t count hy­dro power in Cali­for­nia, it’s still some­where between 2, 3, or 4 per­cent. Get­ting to 30 per­cent is just in­cred­ibly im­port­ant, and I my­self come from re­new­able en­ergy bio­mass/eco­sys­tems for many years.

I know it’s a cliché, but this gov­ernor is very much aligned with an all-of-the-above strategy. “The real­ity is, civil­iz­a­tion is about the con­cen­tra­tion of en­ergy, and right now hy­dro­car­bons are our most abund­ant and eco­nom­ic re­sources. But if we are not in the longer-term work­ing on the trans­ition to a lower car­bon in­tens­ity, what are we do­ing? I’ve had that po­s­i­tion for years, and that’s why I’ve worked act­ively on the fed­er­al cli­mate bill. We need to move to some oth­er way of power­ing our eco­nomy.”

What about tap­ping in­to the Monterey Shale and its po­ten­tial im­pact on cli­mate change? Will frack­ing un­lock this form­a­tion?

There is no reas­on to as­sume that frack­ing is the key to the Monterey shale. There’s a big as­sump­tion that some­how the Monterey is sud­denly go­ing to be avail­able be­cause of frack­ing. [The oil in­dustry is] ac­tu­ally less san­guine than the rest of the world be­cause they’re the ones that are go­ing to have to make the in­vest­ments.

But by pro­du­cing more fossil fuels, does this make com­batting cli­mate change harder?

You can’t blame the pet­ro­leum in­dustry for the eco­nomy’s de­pend­ence on hy­dro­car­bons. That’s like blam­ing the dairy in­dustry for kids be­ing de­pend­ent on milk for cal­ci­um. The de­mand is there, it’s an im­port­ant form of en­ergy, and we will do it with a lower en­vir­on­ment­al foot­print.

How has the Cali­for­nia oil in­dustry evolved over the years? Have you no­ticed an up­ward trend in pro­duc­tion in re­cent years? What is this be­ing fueled by?

The ab­so­lute num­bers we are pro­du­cing less in the state of Cali­for­nia than we were in the 1970s and ‘80s—that’s in sheer bar­rels of oil. Right now, last year’s pro­duc­tion was 196 bil­lion bar­rels. If someone finds keys to the Monterey Shale that very likely will go up.

Is oil pro­duc­tion in­creas­ing already in Cali­for­nia, ir­re­spect­ive of the Monterey Shale?

It is true. With the sweet spot in the in­dustry at about a hun­dred dol­lars a bar­rel — sweet spot mean­ing it’s enough to make a lot of re­serves eco­nom­ic­al to get at it — it’s enough to stim­u­late a fair amount of in­vest­ment for R&D for [en­hanced oil re­cov­ery tech­niques, in­clud­ing frack­ing and dir­ec­tion­al drilling].

With the like­li­hood of oil stay­ing at $100 a bar­rel or more, we will likely see an in­crease in both the re­search and de­vel­op­ment and the pro­duc­tion side.

Un­der cur­rent tech­no­lo­gies, the es­tim­ate is on av­er­age from a reg­u­lar oil-bear­ing reser­voir, that they [the oil com­pan­ies] will be able to tap 30 per­cent of the oil in that reser­voir. With EOR of vari­ous kinds, that can go to 50 per­cent or 70 per­cent. That’s great­er in­vest­ment, takes en­ergy for EOR, that is.

As reg­u­lat­ors, we want to watch trends and tech­no­logy in­vest­ments so we are aware of what we need to put un­der our pur­vey. Wheth­er it’s reg­u­lat­ing a new prac­tice or un­der­stand­ing bet­ter how it works in the oil patch. For the most part our en­gin­eers are ex­tremely well-trained, for the most part I think we have a pretty good handle.

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